Decentralized Autonomous Organizations: the future of business organization? The law, economics and technology of blockchain-organized activities

Edoardo Martino (University of Amsterdam)
Oscar Borgogno (Bank of Italy)


Decentralized Autonomous Organisations (DAOs) aim at innovating the possible organization forms for business activities. DAO are complex blockchain-based smart contracts, which allow token holders to participate directly in decision-making processes and decentralize entrepreneurial activities as much as possible. The advocates of this new kind of digital organization argue that DAOs enjoy significant operational efficiencies and can effectively outside of any legal recognition.
This paper analyses DAOs through the lenses of the economic and legal theories on the firm and on business organization. The analysis makes three contributions: first, it contributes to the literature on the theory of the firm, looking at the role of digital technology in innovating the organization of business activities. Second, it contributes to the literature on the legally recognized forms or business organization, analyzing the tension between the essential role of the law and the limitations of tamper-resistant technologies, such as the blockchain. Third, it contributes to the largely ideological and dichotomic debate on the promises of DAOs, attempting to provide analytical guidelines as to when a business should be organized as a DAO and how to do so efficiently.

Keywords. DAOs, decentralization, business organization, corporate governance, tokens.
JEL Classification. K22; L22; G34

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